Debt/Transcript
Transcript The Mysteries of Life with Tim and Moby Moby is standing at a booth about to sign a loan contract. A large, imposing shark dressed in a business suit approaches him. Moby looks up and sees a sign behind the shark, "Predatory Loans 50% Interest". The shark smiles hungrily. As Moby is about to sign, a hand grabs his arm to stop him. Tim appears next to Moby. A sign below the shark says, "The Loan Shark is in." TIM: Whoa whoa whoa, buddy! You don't want to do that. MOBY: Beep. TIM: I don't care if you want to buy a signed copy of Twilight. He's charging 50 percent interest! And if you don’t pay him back… The shark flashes a menacing smile at the prospect of not being paid. TIM: If you want the DVD so bad, you can save up for it. MOBY: Beep. Moby looks down, sadly. Tim reads from a typed letter. TIM: Dear Tim and Moby, can you tell me about debt? From, Newton. Hey there, Newton. In the simplest terms, debt is money that’s owed to somebody else. An animation shows a figure holding a dollar sign. He hands it to another figure. TIM: Moby was about to borrow $100; he was going to be in debt to that shark there. Moby is shown looking at the shark. The word "debt" appears above Moby’s head. TIM: Another way of putting it is that the shark was offering Moby $100 in credit. A red arrow, labeled "$100" points from the shark to Moby. The word "credit" appears above it. MOBY: Beep. TIM: Yup, a credit card is just an ongoing offer of credit. That's the most common way to run up personal debt. Tim holds up a credit card from the First National Bank of Moby. Moby's face appears on it as well as a credit card number, and a security chip. The name "Titan Cred" is on the upper right corner of the card. TIM: When you use a card, the credit card company pays for your purchase. In effect, you’ve borrowed money from the company, and you have to repay them later. An animation on the left shows Moby in a pizza restaurant, handing his credit card to a waiter. The image in the center shows two buildings: Titan Cred and Pizza Shack. An arrow with a dollar sign on it points from Titan Cred to the Pizza Shack. The image on the right shows a credit card bill for Moby's account. TIM: Like most other lenders, credit cards charge interest, a fee for borrowing money. It’s calculated as a percentage of the amount you borrowed. The credit card statement shows $15 for the purchase of the pizza and an additional $0.25 interest charge. TIM: And it's usually charged every month. So, the faster you repay your debt, the less interest you pay. MOBY: Beep. TIM: Right. Any fair lander would charge you way less than that shark. Moby points unhappily to the word "Predatory" in the sign above the loan shark. TIM: But even so, going into debt always carries some risk. If you're ever late on a payment, you can be charged penalty fees. An image shows a figure carrying a heavy sack labeled with the word "DEBT." Two heavy bags marked "Penalty fee" fall on top of the sack, weighing the figure down even more. TIM: Plus, it's recorded on your credit history, a public record of your reliability as a borrower. A statement revealing Moby's credit history shows the months during which he paid back loans and those months when he failed to pay his debts. TIM: Any time you apply for a credit card or a loan, the bank will look at your credit history. After all, your debt is a risk for the lender, too! Moby is dressed in a suit and tie and sitting at a desk waiting for the loan officer. He is nervously tapping his fingers on the desk and sweating heavily. TIM: If you default, or stop making payments on your loan, they'll lose money. They can take you to a special court where you might be ordered to give up part of your paycheck, or even sell some of your property! Moby appears in court, standing in front of a judge. The loan shark is also in front of the judge, staring angrily at Moby and baring his teeth. MOBY: Beep. TIM: No, I'm not saying you shouldn't ever go into debt. In fact, it's often necessary. Most people don't have enough money lying around for something like a house or a car. An image shows a pirate holding a shovel. His peg leg is propped up on the corner of a chest filled with gold and jewels. TIM: Or let's say you want to become a doctor. An image shows a robot, sitting at a desk, dreaming of becoming a doctor. His thought bubble shows him dressed as a doctor, examining a robot in his office. TIM: Medical school is expensive, so you take out a student loan. An animation shows the robot walking up to a teller at a student loan office. The teller places a large bag of money on the counter. TIM: Since doctors usually make a good living, you’ll probably be able to pay the loan back over time. So in this case, the debt is an investment in your future. Oh, and speaking of college, that’s when a lot of people receive their first credit card offers. An image shows the robot standing in front of BrainPOP University and reading a letter. A close-up of the letter reveals it is from a credit card company. It reads, "Congratulations, student! You have been pre-approved! 0% interest for 6 months." STUDENT ROBOT: Beep. A heart appears above the head of the robot. TIM: You have to be really careful with these. MOBY: Beep. TIM: They'll offer attractive rates at first, because the card companies want new customers. An animation shows a conveyor belt with college graduates on it disappearing into a machine labeled "0% interest." A large figure looms over the machine. TIM: For a lot of young people, the temptation is too much. The student robot is standing in front of BrainPOP University, holding a credit-card approval letter. The letter transforms into an image of the robot on a shopping spree, its arms loaded with shopping bags. TIM: They run up a ton of debt without thinking about how they’re going to repay it. The robot is in a fancy restaurant and a waiter is serving him a lobster dinner. Then, the robot is shown driving a shiny, red sports car. TIM: By the time they’re out of college, they have student loan debt plus a mountain of credit card bills. They can spend years and years climbing back out of debt, just when they’re getting started in life. The robot is now a doctor, but he is worried and holding an armful of letters. To the right are credit notices that say, "second reminder for late payment," "final reminder," and "late payment." MOBY: Beep. TIM: Getting out of debt takes time and discipline. You have to skimp on things you might enjoy, like movies and vacations. To avoid racking up more debt, you need to make do with what you can afford at the moment. The robot appears in front of a movie theater. He turns away sadly just as a green dollar sign sweeps across the screen, changing the scene to a supermarket. The robot is standing in the grocery aisle, choosing between a fancy breakfast cereal that costs $4.99, and a plain one that costs only $0.99 cents. MOBY: Beep. TIM: It's not impossible, but it's a situation you definitely want to avoid. Your best bet is to avoid any debt if you can. Get into the habit of saving up for the things you want. You'll thank yourself later. An animation shows a robot in his home, dropping a coin into a pink piggy bank labeled "New Bike Fund." A green dollar sign sweeps across the screen, changing the scene. The robot is now shown riding a new red bike. He passes the doctor robot who looks sad and is holding a sign that reads, "Will Work for Oil." MOBY: Beep. TIM: That’s true. Businesses and governments get into debt all the time. An image of the United States Capitol building appears. A large green sack labeled "Debt" falls on the building. TIM: They sell bonds to the public, which gives them the money they need in the short-term. An animation shows Uncle Sam handing a bond to Moby. Moby hands Uncle Sam money in return. TIM: Governments use this public debt to pay for everything, from big construction projects to the military to health insurance. An image shows Uncle Sam standing at a construction site and paying the workers. The screen goes black and the words "5 Years Later" appear. TIM: Later on, they have to buy the bonds back, with interest. Uncle Sam appears with a larger sum of money in his hand. Moby hands him back a bond. TIM: The total amount our government owes to bondholders is called the national debt. The image of the Capitol building reappears with the bag of debt still resting on it. The label on the bag reads "national debt." MOBY: Beep. TIM: Yup, our national debt is pretty high right now. But people trust the U.S. economy, so the government can still borrow money at very low interest. Moby hold up a paper that says, "Credit History, United States." It shows short-, medium-, and long-term bonds and the monthly payment history for each type of bond. The image changes to show Uncle Sam holding several bonds in each hand. A sign behind him reads, "Loan Officer." TIM: The United States has never defaulted on its debt, and it’s up to our leaders to make sure it stays that way. MOBY: Beep. Moby points at the loan shark, who is now handing a loan application and pen to Uncle Sam. Ominous music plays in the background. Uncle Sam considers the loan shark's offer, then walks away. TIM: Yikes! That was close. Category:BrainPOP Transcripts